- FTX Group allegedly paid over $25 million in hush money to seven whistleblowers before its collapse in November 2022.
- The whistleblowers’ claims highlighted systemic improprieties within the company.
- One whistleblower received a $16 million settlement just two months before the exchange’s collapse.
Discover the shocking details behind FTX Group’s $25 million settlement to whistleblowers and the subsequent collapse of the crypto exchange.
FTX Whistleblowers Agreed To Settlement Deals Prior To Collapse
Robert Cleary, the independent examiner tasked with conducting the report, discovered the now-settled claims investigating employee severance packages, as FTX did not record employee complaints. According to Cleary’s report, the investigation “ultimately identified settlement agreements totaling more than $25 million with seven whistleblowers who alleged various improprieties at the FTX Group, with most of that money going to five of those whistleblowers who raised allegations of systemic improprieties.” The report further claims that FTX Group failed to investigate whistleblowers’ claims and instead settled them for “considerable amounts,” with the resolutions primarily handled by attorney Daniel Friedberg.
Details of Whistleblower Settlements
One whistleblower (identified as Whistleblower-4) alleged the crypto exchange “misled regulators and investors and lacked adequate corporate structure” in a letter to Bankman-Fried, Friedberg, and FTX’s head of engineering Nishad Singh. “Shortly after, Friedberg told Whistleblower-4 that he should not have written the letter and, in particular, should not have suggested that the FTX Group may not satisfy investor expectations,” the report stated. “Friedberg further suggested that Whistleblower-4 apologize to Bankman-Fried.” Ultimately, the unnamed whistleblower allegedly agreed to a $16 million settlement in September 2022, just two months before the exchange’s collapse.
Another whistleblower, who served as an attorney for FTX’s sister company, Alameda Research, was allegedly terminated after he “raised concerns about regulatory and governance issues at Alameda and Alameda’s handling of customer funds without a money transmitting license.” Despite having only worked at Alameda Research for a total of less than three months, the anonymous attorney was granted a $2 million settlement. A third whistleblower was allegedly granted a similar $1.8 million settlement after only working at FTX.US for two months after they raised concerns regarding “market manipulation and insider trading.”
Ryan Salame To Be Sentenced Following SBF FTX Conviction
News of the report comes ahead of former FTX executive Ryan Salame’s sentencing on Monday on criminal charges tied to his role at the crypto exchange. Salame is the first FTX executive outside of Bankman-Fried to be sentenced for his crimes. Meanwhile, Bankman-Fried is serving a 25-year sentence for orchestrating the multi-billion dollar fraud and has been ordered to pay $11 billion in forfeiture. The whistleblowers’ claims only serve to highlight Bankman-Fried’s desperate attempts to cover up his crimes, to no avail, in the leadup to FTX’s collapse.
Conclusion
The revelations from the independent examiner’s report underscore the extent of the systemic issues within FTX Group and the lengths to which the company went to silence dissent. As the legal proceedings against former executives continue, the crypto community and investors are left to grapple with the fallout from one of the most significant scandals in the industry’s history. The whistleblowers’ settlements, while substantial, serve as a stark reminder of the importance of transparency and accountability in the rapidly evolving world of cryptocurrency.
